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Kenya Central Bank Expected to Hold Rates

FILE: Kenya Central Bank Governor Patrick Njoroge speaks during an interview in his office in the capital Nairobi, Dec. 8, 2015.

JOHANNESBURG - Kenya's central bank will hold interest rates at 9.50% on Monday as authorities have probably done enough to slow consumer price rises, a Reuters poll found on Friday.

"In line with our view that central banks around the world will shift away from their hawkish stance over the coming quarters, we believe that the March 2023 meeting marked the end of Kenya's tightening cycle," said Lara Wolf, Sub-Saharan Africa Country Risk Analyst at Fitch Solutions.

All but one of nine analysts polled in the past week said interest rates will not be changed on May 29, with the other expecting a 25 basis points (0.25%) increase.

The central bank has lifted rates by 250 basis points (2.5%) in the past year, less than other parts of the continent like Ghana which held rates at 29.50% this week after hiking by a cumulative 1,600 basis points.

Inflation in Kenya dropped to an annual 7.9% in April from 9.2% a month earlier, helped by lower prices for some food items.

Wolf expects inflationary pressure in Kenya to ease further during the rest of the year, which, along with weaker growth prospects, will reduce the need for further monetary tightening.

Aly-Khan Satchu, an economic analyst and CEO of investment adviser Rich Management, also reckons the Central Bank of Kenya will keep rates steady before a new governor takes over, with Patrick Njoroge's eight-year tenure ending in June.

Two senior economic advisers to Kenya's president are among a shortlist of six who will be interviewed for the job. The next governor will face the challenge of a heavy government debt burden which is threatening to upend years of macro stability.